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Monday, July 21, 2014

A 30% Reduction in Total Public Sector Payroll?

"According
to the figures, in 2009 the number of people working in the state sector either
as permanent employees or on fixed term contracts came to 952,625 people. In
December of 2013 that number had fallen to 675,530 - a drop of 277,095 or about
70,000 per year". See original article.

Now, I must admit that this small detail had escaped my attention... if one can consider a 30% reduction in total payroll a small detail. On the contrary, one of the angry comments which I heard frequently from Greeks was that "so far, they haven't fired one single public sector employee". And the Troika is making a big fuss out of sending 12.000 public sector employees into the mobility scheme.

How does that square with the above numbers? And, furthermore, how come that there has been so much discussion about a few thousand lay-off's and no reporting at all about the reduction of a few hundred thousand?

13 comments:

There are two kinds of public servants. The 'permanent' and the 'contractors'. The contractors were quite a few and the salary reductions actually come from this segment. What simply happened, is that their contracts were not renewed upon expiry. Moreover, during those five years a good number of permanent civil servants became pentioners -some with early retirement plans, some with regular

I read into the article that the bulk of the decline came through the non-renewal of contract employees. Those are the poorest guys of all: they have no firing notice/period and they get not pensions. All they do is find out one day, often very shortly before expiry of the contract, that there will be no new contract and thereafter they are on their own while their colleagues may enjoy early retirement.

Moreover, there seems to be a number of public servants that had chosen NOT to retire even though they had reached the age limit and the years of service required. When they realised what there was ahead they started abandonning ship in order to establish their pension case and get the sumpsum pension reward ('efapax') before it gets abolished....I think these cases could account for about 150.000 people but don't forget that figures are not verifiable, as the central government until recently (?) had no idea who and what they have been paying for the last 40 years....

Klaus, you talk about "the number of people working in the state sector", this expression has no meaning in a nation where 400+ NGO's are paid by the state, a contradiction in terms if there ever was one. How would you categorize the following entities?-The municipalities and other local entities.-The numerous independent companies that are controlled, owned and subsidized by the state.-The trade unions and political parties that are financed by the state.-The independent counsels, think tanks, advisory groups that works exclusively for the state.The private factories, construction aompanies and service companies that mainly work for the state (at horrendous costs).-The self-employed professionals who live from tasks that the state has legislated mandatory, useful or not.-The more traditional like church, armed forces and pensioners.-Agriculture, which live (very well) off CAP funds from EU distributed by the state. The 12,4% of the Greek population who are occupied in agriculture produce 3,5% of GDP. In Spain the same figures are 4,1% produce 3,1%, in Holland 2,3% produce 2,6%. Greek farming has less than 1/5 of the efficiency than the rest of Europe. When a Greek farmer contribute 1 EURO to GDP he receive 18,5 cents in CAP, the figures for Spain and Holland are 6,8 and 2,5 cents.

Apart from tourism and shipping everybody work in the state sector. Anybody who sends money to Greece, to be controlled by Greek politicians, of any hue, is a fool. Starve the beast.

Lennard

PS. It could be argued that I talk about who is being paid by the state, and you, who works for the state. That is intentional; it's easier to quantify who is being paid.

I know that Greece couldn’t tell until not too long ago the number of public sector employees and I would suspect that part of that was due to a lack of definition as to what counts as public sector for measurement purposes and what not. After 3 years of EU Task Force, I would expect that Greece now has a clear definition what counts.

Obviously, if government expenditures are close to 50% of GDP, more than only public wage & salary earners benefit from the public sector but that is the same everywhere. The question is only whether they benefit in a transparent and fair way or not.

On a more common sense level, I would ask what it is that one wants to bring under control. In the first instance, that would probably have to be government spending. In May 2014, the general government (consisting of the central government, local governments and social security funds) recorded expenses for wages & salaries of 5,39 MEUR. That was, after pensions, the largest item on the expense side of the government. Behind those 5,39 MEUR is a long list of first and last names. Those first and last names would be the public sector employees in the strictest sense for the purpose of budget control. If the government wants to reduce its wage bill, it needs to either reduce the number of first and last names and/or reduce their wages. If it reduces the number through retirements or firings, definitely its pension bill will go up (albeit in a smaller amount than the decrease in the wage bill) and unemployment expenses may go up if people don't find other jobs.

More than the number of public sector employees, I think what matters most is if the services which the public sector provides are needed by the public, of good quality and at a decent price. If the public sector is also involved as an owner of businesses, what matters is the performance of those businesses. If all public sector businesses were run like Warren Buffett runs his corporate empire, the public sector couldn’t be large enough…

Bottom-line: I think I understand where you are coming from but I don’t think there is a simple answer to your questions. I think my general observation of Greece is that wherever the government (i. e. politics) gets involved, quality, efficiency, meritocracy, etc. suffer. That would be my principle argument for recuding the size of Greece’s public sector, however one defines it.

Anybody who thinks that Greece is gonna make it through this is out of touch with reality. Personally what worries me is that after the collapse the conditions that would reboot the economy simply don't exist.

I don't think we are in much of a disagreement. The government spending in Greece is in fact 58,5% of GDP and the public employees consitute 3,3% of the population. The corresponding figures for Austria are 51,3 and 1,1%. As far as I know Austria can with those resources run a society where other countries want to invest, justice prevails, there is a reasonable distribution of wealth and a social safety for those with bad luck. And that without running up a deficit like Greece. The figures for Greece and Austria are 153 and 74% of GDP respectively (IMF Gross Debt, 2012). Do not send taxpayers money to the Greek government. Direct investment in Greece? By all means, if you have the appetite for the risk of public interference.Lennard

To my previous remarks about "starving the beast", some friends (Greeks and expats) have criticized it as being without empathy.I have concluded that there are more Greek voters who think they benefit from the present system than who suffers from it. If that is the case the system cannot be changed by a sovereign democratic process. I do not think EU should do nation building, they should stop supporting the system morally and financially. Should that cause further hardship for those who suffer, humanitarial help should be channeled directly to them.Lennard

I do not share your belief that the Troika after 3 years work knows who work for the state, and if they do they certainly don't know what they are doing or being paid. As much as I believe that they are dedicated to their task and are doing a good job,they are hopelessly "under gunned". 60 experts can not find the truth if several million Greeks try to prevent it. Different valus, morals, language, alphabet, accounting priciples, laws etc. make it even more difficult. May I offer the following example from this week's Griechenland Zeitung, cited from Ekathemerini:A number of local mayors refuse to reveal the details of 693 legal entities controlled by them (and paid by the state). They will not tell the tasks and duties of the companies, neither the wages of the 15000 emplyees.So, mission accomplished? I would say mission impossible.Lennard